F-35 maker Lockheed Martin (LMT) reported mixed second-quarter results while the top Pentagon contractor also lifted its 2021 earnings forecast early Monday. Lockheed stock fell.
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The results kick off a busy week for aerospace and defense stocks. Raytheon Technologies (RTX) reports Tuesday, Boeing (BA) and General Dynamics (GD) are due Wednesday. Northrop Grumman (NOC) reports Thursday.
Lockheed Earnings
Estimates: Earnings were seen rising 13% to $6.53 per share, according to FactSet data. Revenue was expected to climb 4.7% to $16.9 billion.
Results: EPS of $6.52, including a loss of 61 cents a share related to a classified aeronautics program, on revenue of $17.03 billion.
Aeronautics revenue increased 3% to $6.67 billion, led by higher F-16 and F-35 sales. Missiles and fire control revenue grew 5% to $2.94 billion, led by the Army Tactical Missile System and Long Range Anti-Ship Missile. Rotary and missions systems revenue rose 5% to $4.24 billion on Sikorsky helicopter sales. Space revenue climbed 10% to $3.18 billion.
Outlook: Lockheed raised its full-year EPS view to $26.70-$27.00 from $26.40-$26.70 while keeping its revenue view at $67.3 billion-$68.7 billion. Analysts currently see EPS of $26.74 on revenue of $68.35 billion.
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Lockheed Stock
Shares fell 3.2% to 368.51 on the stock market today. Lockheed stock is forming a flat base with a 397.09 entry point, according to MarketSmith analysis. Top F-35 subcontractor Northrop was down 0.9%, while engine maker Raytheon dipped 0.3% ahead of its Q2 report early Tuesday.
In June, Switzerland selected the F-35 for a $6.5 billion fighter contract, beating offerings from Boeing (BA) and Airbus (EADSY). Switzerland is the 15th nation to join the F-35 program of record, according to Lockheed.
Lockheed is also jockeying for an $11 billion Finnish order expected later this year. Finland’s contract will be one of the biggest air-armament acquisitions in Europe.
But the stealth fighter might not complete a major piece of its combat simulator testing until 2022. The Pentagon needs the simulation testing for the F-35’s Initial Operational Test & Evaluation, which clears the way for full-rate production to begin.
The program has also come under fire over costs. Lockheed is working to improve the F-35’s affordability, saying the goal to reduce its cost per flight hour to $25,000 is achievable.
Meanwhile, missile sales, specifically hypersonic weapons, have also been a large growth area for the stock. In January Lockheed said it sees hypersonic weapons sales hitting $1.5 billion and sees that figure doubling to $3 million by 2025. That’s up from an estimated $1 billion in 2020 and $600 million in 2019.
But in April, Lockheed’s hypersonic missile prototype failed to launch in what was supposed to be its first flight. The Air-Launched Rapid Response Weapon (ARRW) failed to release from a B-52H Stratofortress and returned to Edwards Air Force Base in California.
Follow Gillian Rich on Twitter for defense news and more.
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